Russian Crypto Tax Law Passed: Putin’s Bold Move Explained

Russia's Crypto Tax Law: What Putin's Decision Means for Traders

Crypto Declared Legal Property in Russia

Russia has officially declared cryptocurrency as property. It has opened up on various related aspects like progressive income taxes, mining exemptions, as well as steep corporate levies staring 2025. Read on to know the details.

Putin Signs Law

Vladimir Putin, Russian President, signed a landmark law officially declaring cryptocurrencies as property, while also laying a foundation for the formulation of tax rules and regulations within the sector. Announced yesterday, November 29, the digital currency has now been recognized for foreign trade transactions under an experimental legal framework. This marks a significant shift in the nation’s approach to viewing cryptocurrency.

It started when the lower house of parliament, the Russian State Duma, passed the digital currency taxation law in its 2nd and 3rd readings on the 26th of November. Once approved by the upper house, the Federation Council, the next day, the same was presented to the president for his signature.

Aspects Framed Till Now

Now, the mining and selling of digital currencies is to be exempted from value-added tax (VAT). Moreover, organizations that facilitate crypto transactions within the experimental legal regime (ELR) will not have to pay any amount of tax.

However, mining operators who fail to report local authorities (electronically) of their services and provide relevant client information within the mentioned deadline will face a fine of 40,000 rubles ($382.78). The deadline is supposed to be the 25th day of the month following the quarter and the provision will take effect on January 1, 2025.  

Revenue earned through mining will be considered non-cash income, subject to standard income tax rates. Again, the mining expenses must be deducted before finalizing taxable income.

There’s to be a progressive system for personal income tax for digital currency transactions: earnings up to 2.4 million rubles will be charged 13% tax, while those exceeding the threshold will be taxed 15%. Corporate profits resulting from mining activities will be taxed at the standard corporate rate of 25% in 2025.

Restrictions and Exclusions

Restrictions include barring entities engaged in mining or cryptocurrency sales from using simplified, agricultural, automated, or self-employment tax systems. Furthermore, cryptocurrency-related activities remain excluded from the patent tax system.

Conclusion

The entire framework aims at regulating the cryptocurrency sector while focusing transparency as well as accountability. While the law is effective since its publication, there are provisions allowed for required transitions for easy and better implementation.